On the surface, high ROI’s in fundraising should be a cause for celebration / back slapping / bunking off early on a Friday.
It might also point to some problems within your organisation.
Ever the pragmatic voice (I can’t help it!), here are some red flags to be mindful of if you have a super high ROI:
Are your expectations aligned to your activities?
One of my clients has had loads of success with grants fundraising for a capital campaign.
Funding from grants usually means that the money is restricted to specific projects, unlike money raised from fundraising activities including community, events and individual giving. These types of fundraising may generate a lower ROI, but income is typically unrestricted.
The latter will fill your pipeline for major gifts and legacies which will futureproof your income. Grants will not.
As a fundraiser, don’t assume your leaders / trustees know this. Take time to explain the difference before they set you a target you can’t reach.
Are you paying your fundraiser enough?
If they’re generating high ROI’s in fundraising and are consistently above average, then consider paying them more. Great fundraisers are hard to recruit and even harder to keep.
Are you missing out on opportunities because the figures are ‘good enough’?
A fundraiser I worked with recently was a relatively new recruit to her organisation (an environmental charity), focusing for the first time in her charity’s history on major gifts. She was able to engage more deeply with existing donors and had quickly moved their income in this area from c £300,000 to well over £1,000,000.
However, she was also managing a portfolio of close to 100 donors / prospects with no hope of being able to bring all of these relationships to their full potential by herself.
Investment in a second major gifts fundraiser (or mid-level fundraiser) would have reduced the ROI in the short term but would undoubtedly have enabled greater returns over the long term.
This scenario also plays out regularly in the hospice / NHS charities sector, where unsolicited donations are regularly given as a gesture of thanks for care of a family member. Too often, these donors are added to generic mailing lists and are not nurtured to their full potential. A database full of happy customers is a great place to start building a major gifts programme and a short-term investment will lead to long term success.
If you have aspirations for growth and there is increasing demand for your work, then don’t settle for ‘good enough’ when ‘even better’ is hammering down your door and asking to be let in.
Are your fundraisers working at a sustainable pace / at risk of burnout?
Back to the major gifts fundraiser at the environmental charity I described.
The missed opportunities in her portfolio were stressing her out and she confessed to working very long hours. She cared deeply about the charity and wanted every potential donor to be offered the opportunity to support their brilliant work.
Long hours and taking on too much will likely lead to poor quality of work and burnout.
In the longer term, it can impact negatively on mental health and leads to good fundraisers leaving organisations.
Investment in additional staff will be good for donors, good for staff and good for charities and is well worth a short term decrease in ROI.
Are your high ROI’s in fundraising evidence that you’re afraid of taking risks?
Classic case here is of legacy fundraising. Investment in specific marketing around Gifts in Wills will take an average of seven years for any corresponding income to materialise.
Once established, a legacy fundraising programme will deliver an ROI of £30 for every £1 spent. But for a leader managing an immediate funding shortfall, it’s very difficult to invest in something which has a long-term return, regardless of the size of the prize.
High ROI’s in fundraising might indicate fear around trying new things which in the long term, could prove beneficial.
Do you agree? Have you ever been a victim of your own fundraising success?
Chat with us on Twitter @LarkOwlUK, we’d love to hear about your experiences.
Thanks for reading,